Declaring income
 

I have a friend (no it's true) who is a British pensioner (old age type) but works as a private teacher here in Spain. She says she needn't declare her earnings as she pays tax on her pensions in the UK. Surely she's wrong? I would say she should be paying autonomo and declaring her income for tax. She sees herself as a sort of model citizen - upright socialist type who never does anything wrong. I say she is a freeloader who is fiddling the system in exactly the same way as anybody else who works on the black. Am I right?

Re: Declaring income
 

No, she is right: an upright socialist type never does anything wrong!

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I would say it's her own business and none of yours :thumbdown:

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Unless it's a UK government pension she should be declaring it in Spain.

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Ah! But she's very vocal about anyone fiddling...

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That puts a different slant on it :unsure:

Re: Declaring income
 

I really meant her teaching income in Spain. She's been doing it forever - I guess she knew she was on the black before she became a pensioner - now she seems to think she's in the clear.

I must say I have some sympathy with people in general in her position - if she had to pay autonomo and the rest what she does wouldn't be worth doing.

But it galls me a little that she is so against fiddling when she is doing it herself...

Re: Declaring income
 

Any British pensioner in Spain would be mad to go self-employed and pay 260 Euros a month autonomo, irrespective of how much their additional income would be, and I suspect it would be a tiny amount as a private teacher giving a few lessons in her spare time.

I think before the Spanish authorities would go after such a trivial matter, they would deal with their own 'black' workers first - millions of them, and not pensioners either.

Mind you, the woman shouldn't be as silly as to advertise something like that, especially in a bar frequented by 'friends' prepared to grass her up.

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Of course you are correct

Maybe suggest that Spain wouldnt be in this mess if it wasnt for people like her ;)

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Yes you are right and she should declare her income and if she is a resident then she should do it anyway whether she is teaching or not. Thousands of people work for black money including the Spanish..but then there are thousands in the UK doing it too. She should not be discussing it as Hacienda will be very interested to know about it.

Re: Declaring income
 

Of course she should declare her income. If you wish you can report her to "Inspeccion Trabajo" at your nearest INSS.

But, there is a "crisis", so that's an excuse for everyone to declare nothing and pretend to be unemployed and destitute, hence the high unemployment figures, but continue to work in the black.

Everyone is doing it!!!!

OH bumped into someone on the street couple of days ago, from his former town. This bloke makes a living washing cars. He makes 100 euros per day.
Must have to wash a lot of cars for that.............No.............I charge 20 euros per car. ROFL. You see there's loads of dosh out there, but don't tell the government.

Having said all that, I wouldn't dream of paying taxes either, unless threatened with jail!!

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It seems a shame that it's so expensive to be legal. Many people want to earn pin-money but anyone who does so in Spain must be doing it illegally.

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I am suprised that so many people discuss their financial affairs with aquaintances:blink: I wouldn't discuss what I earnt with anyone let alone tell them if I was tax dodging or claiming benefits:)

On this forum everyone seems to have intimate knowledge of everyone:lol:

Re: Declaring income
 

Pensioners dont pay autonomos.

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OK, so as a pensioner who is working what should she be doing?

at least declaring for tax, surely?

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When I was looking into doing a bit of guiding for birdwatchers I discussed it with my lawyer and she was adamant that despite being 65+ I would still have to pay the autonomo as i would be self-employed. No exceptions she said. That really killed the idea for me. Was she wrong?

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On a slightly different tack, Rafikiphoto, with apologies for not replying directly to your point, yesterday my wife and myself paid our annual visit to our accountant. We came back a bit shell-shocked, our tax had increased by almost 50%, due to tax changes caused by the crisis. Last year it was about 3,800 euros, this year close to 6000 euros. Our respective pensions from UK had only increased marginally, as with all pensions.
Our accountant said that it was just for two years - but I cannot see the government reducing tax in 2014.
Had I been in the lucky position of having one foot in the UK and one in Spain, I'd seriously consider treating the UK as my home address and get taxed accordingly.
Mind you, I've no idea now what my UK tax would be. I should add that our combined income, purely from pensions, including standard UK pension, is about 38,000 euros, for those good at tax matters.

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I think you are right,
doing anything - i.e. denouncing, will mean one less friend
and could indicate to others you are not a true friend.

sri

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There is something wrong here. The increases in taxes announced because of the "crisis" couldn't possibly result in an increase that large and anyway they don't apply to last years income.

I have just done my tax returns and there was no significant change (apart from changes to income due to a very small change in the official exchange rate).

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Thanks Fred,
I've just been informed my my accountant that the reason for the huge increase in taxable income (in Spain) is due to the fact that up until now, State pension, as paid by the UK Government, has not been taxed in Spain.
Now it is, and the increased taxation is phenomenal, something that :unsure:all would-be Spanish immigrants should be aware of.

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so have they taxed it twice :confused:

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UK doesn't tax UK State pensions payable to ex-pats. As far as I've been aware for the last five years, at least for ex-pats resident in Spain. I deperately hope there's a mistake, we shall really miss that 2000 euros per year!!!.

Re: Declaring income
 

Of course it has!

Nothing has changed apart from the fact that your "accountant" hasn't a clue what he is doing!

Get a new accountant! My UK state pension has always been taxed in Spain.

If he has not been declaring it for the last few years you are going to get a HUGE back tax bill and fines!

Re: Declaring income
 

No they don't - but only if you submit the right forms to prevent them doing that.

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My State pension isn't taxed in UK but I don't recall ever having asked for that and it's paid in UK not Spain.

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If you want to have your pensions (state or otherwise) paid gross in the UK, which is an option under the taxation treaty, you have to convince HMRC that you are paying tax on it somewhere else.

There has always been a form (FD9) which you can fill in with details of your pension income, which is submitted to Hacienda who note that income and return you the form, duly stamped. That goes back to HMRC who then issue a zero tax code to your pension provider.

The alternative method, sometimes used when Hacienda have refused to accept the form, is to send HMRC a copy of your tax declarations or a certificate of Spanish tax residency.

If someone only has the state pension as their UK income then of course this is always paid gross anyway so it would not be necessary to go through this procedure but of course the pension would still have to be declared in Spain even if no tax was due on it.

Re: Declaring income
 

Apologies Fred, I worded that badly. I should have said that my state pension isn't taxed at source. It was taxed as part of my last UK tax return. My private pensions are taxed at source in UK at the moment. This year is my first Spanish tax return. I have the form FD9 which my accountant recommends sending to HMRC with a certificate of tax residency once this year's Spanish tax return is finalised.

Re: Declaring income
 

but looking at Spanish tax sites, thought pensioners were only taxed on a percentage of their pension income not the whole lot, depending on their actual age

In the UK we have to thank the Liberal Dem's for forcing the personal allowance up to a level where those on low incomes completely escape the tax man

As to not declaring UK pension income if it is taxed in the UK (the state pension wouldn't be taxed as it is less than the personal allowance) seems a lot of Spanish based accountants have been doing that.

Don't the SPanish and UK tax authorities swap info?

Blame the EEC for this, they are making sure that people DO pay taxes when living in two countries in Euroland, and getting all the countries to tax in a similar way.

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That only applies to annuities that have been personally bought by the pensioner from their pension pot.

These are taxed very favourably in Spain on the basis that most of the income is your own capital rather than interest earned.

If you take out an annuity at 65 you only pay tax on 24% of the income. Also the tax rate is the savings tax rate not the normal rates so the tax starts at 21% rather than 24.75%.

It does not apply to any other sort of pensions which are treated as earned income.

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She was wrong.

What would a lawyer, least of all a Spanish one know about the tax system :D

Look on the seg.soc site for starters and if you still want to do it find a good gestor........ or do what everyone else does ;)

Re: Declaring income
 

I just looked there and found the following. As far as my limited Spanish and Google Translate can make out there is no mention of an upper age limit, merely that contributions end on the last month of self employment:
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Nacimiento y Fin de la obligación de cotizar
El trabajador autónomo está obligado a cotizar desde el primer día del mes en que inicia su actividad.
La obligación subsiste mientras el trabajador desarrolla su actividad, incluso durante las situaciones de incapacidad temporal, riesgo durante el embarazo, riesgo durante la lactancia natural, periodos de descanso por maternidad ó paternidad. La obligación termina el último día del mes en que el trabajador finaliza su actividad por cuenta propia, siempre y cuando comunique su baja dentro de plazo. En caso contrario, sigue obligado a cotizar hasta el último día del mes de comunicación de la baja, salvo que se justifique el cese en la actividad.

Es importante, por tanto, que el trabajador autónomo no olvide comunicar a la Tesorería General de la Seguridad Social su cese en la actividad, dentro de los 6 días naturales siguientes a dicho cese.
---

Re: Declaring income
 

This is a most interesting discussion, and as it may effect me in the future I have asked a Spanish based company the following question:-

Q. I am 65 and UK retired, do I still have to register as autonomo and pay the full autonomo charge(s) if I was to work for myself part time ? ?

A. You do have to register as autonomo for tax and social security, but generally you do not have to pay the full social security contribution. You just have to pay a reduced amount, which I believe is around €30 per month.

For those who are below the magic figure then registration as autonomo is an imperative, but it should be noted that.......
......a question mark often arises about legalising irregular, small scale or casual earnings. For example, fees for speaking at conferences, selling arts and crafts, selling on ebay, giving music lessons, earnings from tupperware parties and similar. At what point do such casual earnings trigger the need for autonomo registration? Unfortunately the rules are quite strict and the answer is that to legalise any earnings whatsoever, autonomo registration is required. However it may be possible to opt out of paying autonomo social security if earnings are sporadic and it is not a proper living
http://www.advoco.es/advice/26-auton...istration.html

Therefore the lady refered to originally by Jimenato may well be operating legally or on the margins of legality if it is sporadic and not a proper living. She would not be able to issue an invoice or receipt nor charge IVA

One of the over riding factors in the "to autonomo or not to autonomo" is based on...........
The only people who are exempt from paying social security are those that the law recognises as not employed nor self-employed, in the sense of regularly offering their services as a main occupation. These are people paid for some irregular, occasional activity or even one off events. An example might be an academic on a salary paid for occasional speaking engagements outside the university.

No one earning more than the Spanish minimum wage or Salario Minimo Interprofesional or "SMI" which is currently set at €641,50 a month can avoid paying social security............the key point is irregular : if you are demonstrably not an "occasional" autonomo (e.g. you open a shop or office or your service is permanently on offer) it will be hard or impossible to claim the exemption however low your income
http://www.advoco.es/hot-topics/43-g...system.html#A7

It should be noted that for those who do not speak/read Spanish that the Spanish Government website has an English option for most of its pages, such as at
http://www.empleo.gob.es/en/sec_trabajo/index.htm
and
http://www.empleo.gob.es/en/seg_soc/index.htm

sorry its rather long, but as others have indicated it is a quagmire without the language problems and for the lazy it is easy to just ignore it and it will go away (perhaps)
rgds

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Re: Declaring income
 

That is very good stuff Domino and it would appear that 'my friend' might well be OK.

It possibly also means that the many people we hear about who do the odd musical gig or do peoples gardens/painting/cleaning every so often or give the odd music lesson or mend the odd laptop (you get my drift) are also exempt from having to pay autonomo.

Re: Declaring income
 

Amongst all the guff is the section regarding pensionistas who having paid in for 35 yrs dont have to pay autonomos.

Assuming you are a pensioner you get a pension and you also have health cover......... therefore you dont pay autonomos.

Your gestor is the only one who can clarify this and deal with this with your local seg.soc office.

Nowhere do I read anywhere much this type of info because in the good old days people retired so no need to work.

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I wouldnt want to get between you and your friend....;)

I have spent some time researching this as it is something that is regularly thrown up on this forum and as I have said - I have a potential interest in it.
Despite what we hear, there are schemes that can assist people in starting up in business as well as the one for females returning after pregnancy. Its finding them, applying in the manner most conducive to getting the assistance.

Yes we are in the EU but it is still a foreign land where they have their own rules that are different to the ones we were brought up in. We have to accept that or go home.
But by researching and trying to do things within the rules will make more friends and few enemies - I for one don't want to be looked upon by my neighbours as a law breaker, treated the same way as many of the incomers from other parts of the EU are treated in the UK at the moment.

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Re: Declaring income
 

In "the good old days" the pensioner was the lowest of the low, the one who had to be subject to Means Testing to get any benefits. With miniscule pension increases compared with massive increases (to fuel profits for the shareholders) in utility costs pensioners are finding life very difficult indeed.

It used to be called a Retirement Pension, but the R word is more often than not dropped. but the individual doesn't have to Retire From Life.
If they want to breed pigeons then thats up to them, in the same way as having a little job to "keep the mind active" or doing work for yourself giving others the benefit of your experience.
This is what is keeping so many "elderly" more and more active into later life, giving them the time and a little bit of extra money to enjoy that life instead of living to work.

Just because someone has been able to get their act together, despite a lowly income, and move to Spain for that better life in retirement shouldnt mean they should be disbarred from working if they want to.

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bearing in mind your occupation here it can cause a problem for you as you may be paying someone to do a musical gig or maintenance work where you cannot get a proper invoice to suit Spain's IVA laws and therefore wouldnt be able to get the IVA back. Not sure where it leaves you on the main part of the bill - perhaps you could enlighten me on that ?

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Nobody said they should be barred from working.......dont be silly.

Pensioners can and do work but they dont pay autonomos.

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One thing Brits. can very rarely avoid is having their children pay Inheritance Tax to HMRC. If you are British and your Father was also British then the chances are that your Estate is 'captured' for ever and a day by the swingeing 40% tax bill. However there are several methods of legitimately avoiding or mitigating this tax !

Re: Declaring income
 

Only if the estate is over 325,000 GBP.